Federal broadband grants get tax-free status under new bill

What it does

This bill excludes certain federal and state broadband infrastructure grants from taxable income. Recipients of grants under the Broadband Equity, Access, and Deployment Program, State Digital Equity programs, rural broadband loan-grant programs, and similar initiatives will not owe federal income tax on those grant amounts. The bill prevents double-dipping by denying deductions or credits for the same expenses and reducing property basis by the grant amount.

Why we flagged it

The bill is a targeted tax exclusion designed to reduce the tax burden on recipients of federal broadband deployment grants, effectively subsidizing broadband infrastructure investment by exempting grant proceeds from federal income taxation.

What the text implies

• The tax exclusion applies retroactively to amounts received after March 11, 2023, potentially creating refund claims for prior-year tax returns already filed by broadband grant recipients.
• By excluding grant income from taxation, the bill reduces federal revenue without explicit appropriation, effectively converting infrastructure grants into tax-preferred transfers.
• The 'denial of double benefit' clause prevents recipients from claiming deductions or credits on the same expenses, but does not prevent them from reducing property basis—creating a permanent tax deferral on depreciation.
• Broadband providers receiving grants may benefit disproportionately if they are structured as pass-through entities, allowing the tax benefit to flow to private shareholders rather than being retained by public or nonprofit recipients.

Section numbers refer to the bill text the analysis read — linked under Primary records below.

Who it affects

The tax exclusion benefits broadband grant recipients (primarily rural communities, local governments, and broadband providers) by reducing their tax burden on federal infrastructure funds, supporting broadband deployment to underserved areas. However, the benefit flows primarily to grant recipients and broadband infrastructure entities rather than to the general public as consumers, and the foregone federal tax revenue may reduce resources available for other public priorities.

Who stands to gain

• Broadband infrastructure grant recipients (rural electric cooperatives, local governments, broadband
• State and local governments receiving federal broadband funding
• Tribal governments and territories receiving broadband grants
• Private broadband deployment companies and contractors

Named in the bill

Internal Revenue Code of 1986, Broadband Equity, Access, and Deployment Program (BEAD), State Digital Equity Capacity Grant Program, Digital Equity Competitive Grant Program, Infrastructure Investment and Jobs Act (IIJA), Rural Electrification Act of 1936, Social Security Act (sections 602, 603, 604), Consolidated Appropriations Act, 2021, Department of the Treasury, Rural Utilities Service

Where it stands

15 cosponsors: 8 Republicans, 7 Democrats.

• Mar 5, 2025 — Introduced · Congress.gov: “Introduced in House”
• Mar 5, 2025 — Referred to House Committee on Ways and Means · Congress.gov: “Referred to the House Committee on Ways and Means”

Dates and quoted wording are Congress.gov's action record; the timeline shows status changes, not every procedural step.

Money around this bill

6 lobbying clients named this bill on 10 disclosure filings across 2 quarters, Dec 2025 to Jun 2026. Those filings disclosed $5,375,000 in lobbying spend. A filing names 18 bills on average, so that figure is what each filing reported, not a share belonging to this bill.

More lobbying clients named this bill than 82% of bills with at least one filing.

Mike Kelly, the sponsor, reported $955,974 in PAC receipts in the 2026 cycle.

• AT&T Services Inc and Its Affiliates — $2,650,000 on 1 filing
• National Rural Electric Cooperative Association (nreca) — $1,750,000 on 2 filings
• National Telecommunications Cooperative Association — $370,000 on 2 filings
• Competitive Carriers Association — $320,000 on 2 filings
• Wta -- Advocates for Rural Broadband — $225,000 on 2 filings

Lobbying Disclosure Act filings through Jul 20, 2026. A filing shows who paid to lobby on a bill it names, not what changed.